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K. Hovnanian Enterprises, Inc. Commences Tender Offers and Related Consent Solicitations for Its Senior Secured and Unsecured Notes

Posted on: Monday, 21 September 2009, 15:21 CDT

RED BANK, N.J., Sept. 21 /PRNewswire-FirstCall/ -- Hovnanian Enterprises, Inc. (NYSE: HOV) (the "Company") announced that its wholly owned subsidiary, K. Hovnanian Enterprises, Inc. ("K. Hovnanian"), has commenced tender offers to purchase for cash (i) any and all of its properly tendered and accepted outstanding 11 1/2% Senior Secured Notes due 2013 (the "2013 Secured Notes") (the "2013 Secured Notes Tender Offer"), (ii) any and all of its properly tendered and accepted outstanding 18% Senior Secured Notes due 2017 (the "2017 Secured Notes" and, together with the 2013 Secured Notes, the "Secured Notes") (the "2017 Secured Notes Tender Offer") and (iii) the maximum aggregate principal amount of its properly tendered and accepted outstanding 8% Senior Notes due 2012, 6 1/2% Senior Notes due 2014, 6 3/8% Senior Notes due 2014, 6 1/4% Senior Notes due 2015, 7 1/2% Senior Notes due 2016 and 6 1/4% Senior Notes due 2016 (collectively, the "Unsecured Notes," and, together with the Secured Notes, the "Notes") that it can purchase for a maximum aggregate consideration, excluding accrued and unpaid interest, of up to $130.0 million (the "Unsecured Notes Tender Offer" and, together with the 2013 Secured Notes Tender Offer and the 2017 Secured Notes Tender Offer, the "Tender Offers"). In connection with the 2013 Secured Notes Tender Offer and the 2017 Secured Notes Tender Offer, K. Hovnanian is soliciting consents (the "Consent Solicitations") to amend certain provisions of the indentures governing the Secured Notes.

The table set forth below lists each series of Notes that are the subject of the Tender Offers and Consent Solicitations.

Early Title Outstanding Tender Total Acceptance of Principal Consideration Consideration Priority Security Amount(1) (2) (2)(3) Level -------- --------- --- ------ ----- Secured Notes ------------- 11 1/2% Senior Secured Notes due 2013 $600,000,000 $50 $1,060 N/A 18% Senior Secured Notes due 2017 $29,299,000 $50 $1,000 N/A Unsecured Notes --------------- 8% Senior Notes due 2012 $43,500,000 $50 $880 1 6 1/2% Senior Notes due 2014 $144,000,000 $50 $800 2 6 3/8% Senior Notes due 2014 $114,300,000 $50 $790 3 6 1/4% Senior Notes due 2015 $129,300,000 $50 $780 4 7 1/2% Senior Notes due 2016 $172,500,000 $50 $770 5 6 1/4% Senior Notes due 2016 $173,200,000 $50 $770 6 (1) As of July 31, 2009. (2) Per $1,000 principal amount of Notes that are accepted for purchase. (3) Includes the applicable Early Tender Consideration.

Each Tender Offer will expire at 12:00 midnight, New York City time, on October 19, 2009, unless extended or earlier terminated (with respect to each Tender Offer, the "Expiration Date"). Holders of Notes must validly tender and not withdraw their Notes on or prior to 5:00 p.m., New York City time, on October 2, 2009, unless extended (with respect to each Tender Offer, the "Early Tender Date"), in order to receive the Total Consideration (as set forth in the table above) for their Notes. The Total Consideration includes an early tender consideration of $50 for each $1,000 principal amount of Notes validly tendered on or before the Early Tender Date and accepted in the applicable Tender Offer (with respect to each Tender Offer, the "Early Tender Consideration"). Holders validly tendering their Notes after the Early Tender Date and on or prior to the Expiration Date will be eligible to receive only the Tender Offer Consideration for such Notes, which is equal to the Total Consideration for such Notes less the Early Tender Consideration (as set forth in the table above). Notes tendered may be withdrawn at any time prior to 5:00 p.m., New York City time, on October 2, 2009, unless extended, but not thereafter.

2013 Secured Notes Tender Offer and Related Consent Solicitation

The 2013 Secured Notes Tender Offer is an offer to purchase any and all properly tendered and accepted outstanding 2013 Secured Notes pursuant to such Tender Offer.

In conjunction with the 2013 Secured Notes Tender Offer, K. Hovnanian is soliciting consents to certain proposed amendments from the holders of the 2013 Secured Notes to certain provisions in the indenture governing the 2013 Secured Notes in order to, among other things, (i) permit the incurrence of additional first lien secured debt and (ii) eliminate the limitation on repurchases of certain debt.

Holders of at least a majority of the outstanding principal amount of 2013 Secured Notes must provide their consents to the applicable proposed amendments on or prior to the Early Tender Date. Such proposed amendments constitute a single proposal, and consenting holders of the 2013 Secured Notes must consent to such proposed amendments as an entirety and may not consent selectively with respect to certain of such proposed amendments.

2017 Secured Notes Tender Offer and Related Consent Solicitation

The 2017 Secured Notes Tender Offer is an offer to purchase any and all properly tendered and accepted outstanding 2017 Secured Notes pursuant to such Tender Offer.

In conjunction with the 2017 Secured Notes Tender Offer, K. Hovnanian is soliciting consents to certain proposed amendments from the holders of the 2017 Secured Notes to certain provisions in the indenture governing the 2017 Secured Notes in order to, among other things, (i) permit the incurrence of additional first lien secured debt, (ii) eliminate the limitation on repurchase of certain debt and (iii) amend the definition of refinancing indebtedness.

Holders of at least a majority of the outstanding principal amount of 2017 Secured Notes must provide their consents to the applicable proposed amendments on or prior to the Early Tender Date. Such proposed amendments constitute a single proposal, and consenting holders of the 2017 Secured Notes must consent to such proposed amendments as an entirety and may not consent selectively with respect to certain of such proposed amendments.

Unsecured Notes Tender Offer

The Unsecured Notes Tender Offer is an offer to purchase properly tendered and accepted outstanding Unsecured Notes, excluding accrued and unpaid interest, as set forth in the table above, such that the principal amount for such purchase shall not exceed the maximum aggregate consideration of $130.0 million (the "Maximum Payment Amount"). K. Hovnanian reserves the right, but is not obligated, to increase or decrease the Maximum Payment Amount.

If Unsecured Notes are properly tendered (and not validly withdrawn) in the Unsecured Notes Tender Offer such that the amount of consideration (excluding any accrued and unpaid interest) K. Hovnanian would be required to pay pursuant to the Unsecured Notes Tender Offer upon acceptance of all such Unsecured Notes would in the aggregate exceed the Maximum Payment Amount, K. Hovnanian will instead accept for payment only such amount of Unsecured Notes as would result in our paying an amount equal to the Maximum Payment Amount and K. Hovnanian will accept for purchase Unsecured Notes in accordance with the "Acceptance Priority Level" as set forth in the table above, with Level 1 being the highest priority.

After K. Hovnanian has accepted all Unsecured Notes properly tendered (and not validly withdrawn) having a higher Acceptance Priority Level than a particular issue of Unsecured Notes, if the remaining portion of the Maximum Payment Amount is adequate to accept for purchase some but not all of that particular issue of Unsecured Notes then K. Hovnanian will prorate the amount of Unsecured Notes of such issue that will be accepted for purchase based on the aggregate principal amount tendered of such issue and the Maximum Payment Amount remaining. The Unsecured Notes Tender Offer is not conditioned on a minimum principal amount of Unsecured Notes being tendered.

We are not soliciting any consents from the holders of Unsecured Notes.

General

K. Hovnanian will pay accrued and unpaid interest on all Notes tendered and accepted for payment in any Tender Offer from the last interest payment date to, but not including, the settlement date of such Tender Offer.

Each Tender Offer is conditioned on the satisfaction of certain conditions including, but not limited to:

• The tender of 2013 Secured Notes and delivery of requisite consents, on or prior to the Early Tender Date, representing a majority of the principal amount of such 2013 Secured Notes outstanding.
• The execution by the trustee of a supplemental indenture to the indenture relating to the 2013 Secured Notes implementing the proposed amendments following receipt of the requisite consents.
• The tender of 2017 Secured Notes and delivery of requisite consents, on or prior to the Early Tender Date, representing a majority of the principal amount of such 2017 Secured Notes outstanding.
• The execution by the trustee of a supplemental indenture to the indenture relating to the 2017 Secured Notes implementing the proposed amendments following receipt of the requisite consents.
• The receipt and availability of funds from financings in an amount sufficient to pay the Total Consideration or Tender Offer Consideration, as the case may be, plus accrued and unpaid interest to the settlement date, for validly tendered and not validly withdrawn Notes.
  

K. Hovnanian reserves the right, in its sole discretion, to waive or modify any one or more of the conditions to any of the Tender Offers and Consent Solicitations in whole or in part at any time on or before the Expiration Date of such Tender Offer and Consent Solicitation.

The terms and conditions of the Tender Offers and Consent Solicitations are described in the Offer to Purchase and Consent Solicitation Statement, dated September 21, 2009, and in the related Consent and Letter of Transmittal (the "Offer Documents"). K. Hovnanian has retained Credit Suisse Securities (USA) LLC ("Credit Suisse") to serve as dealer manager for the Tender Offers and as solicitation agent for the Consent Solicitations, and Bondholder Communications Group ("BCG") to serve as the information and tender agent. Copies of the Offer Documents may be obtained from BCG at (888) 385-2663 (toll free). Questions regarding the Tender Offers and Consent Solicitations may be directed to Credit Suisse at (800) 820-1653 (toll free) or (212) 538-1862 (collect).

This press release does not constitute an offer to purchase or a solicitation of any offer to sell the Notes or any other securities. The Tender Offers and Consent Solicitations are being made solely by the Offer Documents.

About Hovnanian Enterprises

Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, Chairman, is headquartered in Red Bank, New Jersey. The Company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Kentucky, Maryland, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company's homes are marketed and sold under the trade names K. Hovnanian(R) Homes(R), Matzel & Mumford, Brighton Homes, Parkwood Builders, Town & Country Homes, Oster Homes, First Home Builders of Florida and CraftBuilt Homes. As the developer of K. Hovnanian's(R) Four Seasons communities, the Company is also one of the nation's largest builders of active adult homes.

Forward-Looking Statements

All statements in this press release that are not historical facts should be considered as "forward-looking statements". Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic and industry and business conditions, (2) adverse weather conditions and natural disasters, (3) changes in market conditions and seasonality of the Company's business, (4) changes in home prices and sales activity in the markets where the Company builds homes, (5) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, and the environment, (6) fluctuations in interest rates and the availability of mortgage financing, (7) shortages in, and price fluctuations of, raw materials and labor, (8) the availability and cost of suitable land and improved lots, (9) levels of competition, (10) availability of financing to the Company in order to satisfy the financing condition for the Tender Offers, (11) utility shortages and outages or rate fluctuations, (12) levels of indebtedness and restrictions on the Company's operations and activities imposed by the agreements governing the Company's outstanding indebtedness, (13) operations through joint ventures with third parties, (14) product liability litigation and warranty claims, (15) successful identification and integration of acquisitions, (16) significant influence of the Company's controlling stockholders, (17) geopolitical risks, terrorist acts and other acts of war and (18) other factors described in detail in the Company's Annual Report on Form 10-K for the year ended October 31, 2008 and Quarterly Reports on Form 10-Q for the quarters ended January 31, 2009, April 30, 2009 and July 31, 2009. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

SOURCE Hovnanian Enterprises, Inc.

Source: PR Newswire

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